An investment in the housing market remains an excellent long-term investment as long as investors time it right.

The ideal is to buy when the market is at a low point and sell when it’s peaking, which is rarely possible, say property analysts.

Fresh research done by property analyst Lightstone shows that home buyers that bought and sold in the period between January 2008 and January 2009, have probably suffered a loss.

However, it is unlikely that buyers who have a five-year view will suffer the same fate, says Jacques du Toit, senior property analyst at Absa.

Hayley Ivins, property analyst at Lightstone, says a home buyer who bought a house for R1m in January 2008 when the market peaked and sold it in January 2009 when the market tanked, probably achieved a price of R960,995. This represents a drop of 3,9%.

But a buyer who bought a house for R1m in January 2008, and sold it in May this year, would have received R1,053m – an increase of 5,3%. A buyer who bought a house for R1m in January 2010 and sold it in May 2010, would have achieved a price of R1,096,500m, a rise of 9,65%.

Ivins says it shows that the housing market has made progress as far as prices are concerned, but the transaction volumes are still low.

Lightstone’s house price index looks at where the market is at right now in terms of total transactions, distressed sales and houses that have been sold for a lower price than the previous sales price. This index is regarded as a reliable measuring stick as it compares the prices of houses sold to the price that was previously paid. It is based on Deeds Office data.

Du Toit says to get the timing right will be nearly impossible, but buyers and sellers have to make their decision in light of trends in the market at a given point as well as the future expectations. “If the expectations are that prices will fall in the near future, the buyer might want to wait a little bit. But if it is expected that prices will rise, he has to jump in and buy.”

He says for the seller it is imperative to look at current prices and compare this to what he paid.

It is important for the buyer to look at where the level of the price currently is compared to a while ago. “For the buyer it is about affordability and if he’s getting value for his money.”

He says the current information available in the market can be used for this. This includes broader economic data and the house price data, which indicates broader trends in the market. – Elma Kloppers, Sake24

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